If Stamp Duty is too high then it will raise the unemployment rate

Lord Lawson has called for a substantial cut in stamp duty - we agree:

Stamp Duty levels are “crazy” and must be reversed to stop a “tax on mobility”, former Conservative Chancellor Lord Lawson has said.

Lord Lawson said Philip Hammond, the current Chancellor, should cut stamp duty in March’s Budget and increase other taxes to pay down the deficit.

The comments came after research found Stamp Duty reforms have slowed the housing market and raised half as much money as the Treasury predicted.

It's not just that Osborne was politically too clever by half as a Chancellor, it's that such transactions taxes clog up the market. And with housing that's really not something we want to be doing. For if we've a housing market too constipated by the transactions costs then the unemployment rate is going to be higher.

It's well known that if the portion of housing which is owner occupied becomes "too high" then we end up with a higher unemployment rate. Labour mobility is a necessary part of the allocation of labour across work to be done. It  costs a substantial amount of money to buy and sell a house. The more it does, the less geographical labour mobility and thus the higher the unemployment rate. 

We thus desire to have a substantial private rental market which provides that lower cost mobility. And no, council housing doesn't cut it - that market, at least to move across local authority boundaries, takes even longer than the selling and buying of houses.

Of course, it's terribly tempting for a Chancellor, when he sees someone cashing a cheque for hundreds of thousands, to insist that he has a piece of it. But any substantial stamp duty upon housing is going to turn up as a cost elsewhere in the economy, in the costs of the dole.